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📅 Last Updated: August 26, 2022 ✏️ Written By Bryan Daly 🕵️ Fact-Checked by Caitlin Wood
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Short term loans are an essential credit product that can be found all over Nova Scotia. Typically, Nova Scotia borrowers use these loans to cover their expenses through affordable scheduled payments over the course of 1-3 years.
Click here to learn more about loans in Nova Scotia.
Recommended Uses for a Short Term Loan in Nova Scotia
Assuming you’re approved, you can use your loan to finance:
- A much-needed vacation
- Household supplies, groceries or other consumer goods
- Tuition fees and other educational costs for yourself or someone else
Loans Canada recommends using your short term loan in Nova Scotia for:
- Larger expenses (that your income doesn’t cover)
- Household maintenance (repairs, renovations, property upkeep, etc.)
- Vehicle maintenance (purchase, repairs, new tires, fuel, etc.)
- Emergency or unexpected expenses (medical costs, travel, large bills, etc.)
- Credit building and improvement
- Paying down your other outstanding debts (credit cards, utilities, etc.)
Need help creating a debt repayment plan? Check out this infographic.
The Pros and Cons of Short Term Loans in Nova Scotia
In reality, every credit product comes with its own benefits and drawbacks. Always consider these elements carefully before you decide to apply for a short term loan.
Pros of Short Term Loans:
- You can negotiate with your lender in Nova Scotia for a payment plan that suits your finances
- You may receive speedier approval than with other, larger loan products. (depending on how much you request, how efficiently you filled out your application, etc.).
- Since loan amounts tend to be smaller, the approval process will generally be less strict than with larger loans (your credit strength and income won’t be as important, making the loan easier to get).
Do you have bad credit? Here’s what a bad credit lender will look for.
Cons of Short Term Loans
- Since payment terms are shorter and the borrowing guidelines are less strict, interest rates can be higher than with other credit products, costing you more over time. Always make sure to factor in your interest rate when calculating your potential payments.
- Because of the “easy” nature of short term loans, many borrowers in Nova Scotia apply for too many and end up relying on them for every expense, even unnecessary ones. If not managed responsibly, any credit product can put you in serious debt! Take a look at these debt management products for credit users.
- Scamming, fraud and identity theft is a possibility. Before giving away any information, always make sure to research your potential lender properly.
Having trouble with your finances? Check out credit counselling in Nova Scotia.
Short Term Loans vs. Payday Loans
Payday loans are another credit product that many borrowers in Nova Scotia use because they’re very easy to get. However, never apply for a payday loan based on this convenience! They can cause severe debt when not handled properly.
Payday loans can be more convenient than short term loans because:
- You’ll be approved within the same day you apply (unless you apply online).
- 3 months confirmed income, steady employment, and an active chequing account are the only requirements for approval.
However, short term loans are more beneficial because:
- They come with much lower interest rates than payday loans (in Nova Scotia, payday loan lenders can charge up to $22 per $100 borrowed, which is over 600% APR).
- You’ll only be given 14-days to reimburse your payday loan. If you can’t afford to pay back your loan (including interest and miscellaneous fees), you’ll be charged a hefty penalty.
- Since payday loan borrowers in Nova Scotia are sometimes more desperate (i.e. they have bad credit or need money fast), scam artists use their desperation to prey on them and steal their personal/banking information. While this is possible with other credit products, it’s even easier when it comes to payday loans.
Take a look at this infographic for a better picture of how the payday loan cycle works.
Frequently Asked Questions
Is there a way to increase my chances of approval, but decrease my interest rate? Yes! While short term loan approval is relatively easy to get, there are things you can do to raise your creditworthiness, ultimately earning you better chances of approval and a better interest rate, such as:
- Paying all your credit account bills on time and in full
- Increasing your credit limit (if possible)
- Disputing errors on your credit report
- Organizing and updating all your personal/banking information prior to applying
- Getting a co-signer (if your credit and/or income isn’t good enough)
Is there a limit to how much I can borrow? The amount of money you’re approved for will depend on your particular lender’s specifications. However, short term loans usually come in maximum amounts of $5,000.
Do all lenders ask for an advanced payment, security deposit or loan insurance? Absolutely not! Be very careful when choosing a short-term loan lender in Nova Scotia. Asking for payment of any kind prior to approval is illegal in Canada. If they ask for a payment before you even receive your funds, it’s a clear sign of a scam. To learn how you can spot a loan insurance scam, read this.
Frequently Asked Questions
What are the types of short-term loans?
A short-term loan can mean many things. They don’t usually exceed $1500. They are usually repaid within 2 to 8 weeks, sometimes up to 3 months. Among the more common types of short-term loans are credit cards, personal loans, and payday loans. With shorter terms come higher rates. Payday loans are among the highest with APRs exceeding 500%. Credit cards and personal loans cannot exceed the legal limit of 60% but usually fall within 10% to 36%.
Are there prepayment fees on short-term loans?
You should save on interest when paying off a short-term loan before it’s due. Credit cards generally have a grace period where no interest is calculated on purchases. Of course, be aware that if you take a cash advance on your card, interest starts to add up immediately. In regards to payday loans, in most provinces, providers are usually not allowed to penalize you for paying off the loan before it’s due. If a personal or installment loan is considered open-end or flexible, then there shouldn’t be a penalty for making any early payments. Fixed-term or closed-end contracts, however, will likely have such penalties. Consult with your provider to determine which loan type you have.
Can I get a short-term loan in Nova Scotia if I have bad credit?
It’s entirely possible to qualify for a short-term loan with poor credit. Some lenders offering personal or payday loans might not check your credit to determine if you qualify. They will instead determine your ability to repay the loan using other metrics. This will require that you submit documents that verify your identity, banking details, address and source of income. Another option is a secured credit card since credit history isn’t too much of a concern since it’s backed by a security deposit. Similarly, securing a personal loan by using a vehicle as collateral is another way to qualify for a short-term loan, bad credit notwithstanding.
Loans Canada, a Network For All Your Short Term Loan Needs
If you’ve been shopping around for the right short term loan, your search ends here at Loans Canada. We’ll put you in touch with the best sources of lending in Nova Scotia for all your financial needs. All you have to do is apply below!
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